While digital transformation has the potential to dramatically accelerate long-term business performance, the truth is that we are deep into the digital awkward years. Though the promise of digital is full of new possibilities, most companies are currently experiencing the growing pains of hybrid IT complexity.

Today’s businesses see digital technologies that need to be seamlessly integrated with legacy IT infrastructures to optimize business processes, agility and scale. They anticipate an increasing number of connected-devices at the edge generating mountains of data that will expand their organization’s threat landscape, while data security and compliance requirements continue to increase.

At Equinix, we have a unique perspective on these dynamics and a special view into what’s coming next. For more than 20 years we have listened closely to our customers’ digital challenges and dreams and innovated to solve and enable them. Today this track record has put us front and center in the digital journeys of nearly 10,000 customers all over the world, as enterprises and service providers tap into the power of our business and IT ecosystems and build their digital-ready infrastructures on our global interconnection platform.

We are working with our customers around the globe to build the data center of the future, blazing the trail for next-generation interconnection and innovation, including emerging security, data and application infrastructure services. And as business and technology leaders move closer to another year of high stakes digital transformations and the big IT decisions that power them, we’re taking a closer look at the technologies that will make the biggest digital business impact in 2019.

Nearly every industry has the potential to benefit from the endless possibilities of 5G, the next evolution of wireless network architectures. 5G is not only about faster data connections and better online experiences, it’s about rethinking what’s possible. Futuristic visions of smart cities, driverless cars and remote, robotic surgeries suddenly seem within reach.

McKinsey doesn’t expect large-scale 5G deployment until early 2020. First, enterprises must tackle the network transformation that 5G requires.[i]This includes creating infrastructures at the edge that can truly leverage 5G’s fiber-like speeds and handle latency-sensitive applications consistently and reliably. Existing mobile networks will need to be re-architected and rebuilt throughout the enterprise.

We anticipate that our customers will increase their 5G investments significantly in 2019 to repurpose their existing cellular infrastructures and build new edge architectures for hosting 5G networks, which will include cloud radio networks. Performance and cost optimization will be critical to set the stage for 5G and we see network carriers starting to capitalize on disaggregated, open-source-based commodity networking hardware and virtual wireless networking stacks.

AI will continue to make its way into our business and personal lives, driving productivity in unprecedented ways. According to PwC research, AI will spur global GDP to grow 14% by 2030 to the tune of $15.7 trillion.[ii]

As more data gets generated, processed and analyzed at the edge, we expect to see a direct impact on AI architectures. No longer are AI model building and model inferencing limited to centralized locations. In 2019, we expect to see more distributed and federated AI applications at local edge locations, where large amounts of data are being generated.

Enterprises will need to access more external data to improve the accuracy of their AI model predictions, which will lead to buying and selling data in more secure data marketplaces. Enterprises will also resist getting locked into a single cloud by leveraging AI innovation in multiple public clouds. Ultimately, the enterprises using next-generation AI architectures will have to transition to the distributed model of multiple data centers.

Prediction #3: “Un-Blocking” the ChainA “network of networks” will mature blockchain for greater business security and monetization

As we predicted last year, private blockchain networks made significant headway in 2018 as enterprises began attempting to capitalize on their speed, low cost and security benefits. The relentless surge of data breaches made this innovative approach to verifying identity and protecting privacy a game changer—especially in the financial services industry.

More of the world’s largest clouds, consulting companies and enterprises are moving ahead to solve real business problems using blockchain. By 2022, IDCpredicts that blockchain technology investments will reach $11.7 billion.[iii]

In 2019, we expect to see more enterprises joining multiple blockchain networks, particularly from the supply chain, finance, government and healthcare industries. Ultimately, this convergence will create a “network of networks” that spurs new opportunities and demands for business and IT leaders. They will be looking for ways to leverage blockchain networks when business-critical application performance and real-time transaction updates are non-negotiable. And they will need to integrate multiple blockchain networks with their legacy applications, making blockchain gateways increasingly common in 2019.

The global enterprise shift to the cloud is leading to further scrutiny around company and customer data protection and sovereignty practices. Since the General Data Protection Regulation (GDPR) put sweeping data privacy restrictions into law this year, many other countries’ government agencies have followed Europe’s lead in crafting stricter data privacy regulations. We’re seeing more enterprises and SaaS providers deploying mini-clouds in multiple regions to maintain local data residence and compliance regulations. At the same time, they’ll require distributed data management architectures that support global network and data fabrics to coherently manage these distributed cloud environments and integrate them into existing IT infrastructures.

To contain data privacy breaches and keep control over their data, in 2019 we predict enterprises will focus on new data management techniques such as homomorphic encryption that allows computations to be done on encrypted data without requiring access to the data security key.

And new approaches that allow consumers to bring algorithms (e.g., financial, risk, security analytics) to where the provider’s data is located (private or neutral colocation data centers) and apply them against the data without unencrypting it will also enter the market in 2019. This year, we introduced a hardware security module (HSM)-based virtualization technology, Equinix SmartKey™. It is a cloud-agnostic, HSM-as-a-service at Equinix that keeps data encryption keys separate from the data that is stored on-premises or in the cloud, preventing service providers or bad actors from “peeking into” a company’s data. Equinix SmartKey plays a critical role in ensuring the security of data access across hybrid/multicloud infrastructures.

Private cloud providers are taking some pages out of the public cloud playbook and working to ease cloud deployment and management, while making it more advantageous for enterprises to deploy these solutions in third-party locations. At the same time, the maturation of virtualization/container technology and the standardization of container formats (e.g., Docker) and orchestration technology (e.g., Kubernetes) are increasing hybrid/multicloud environments as the enterprise architecture of choice.

More than 80% of companies are running multicloud environments with up to five different cloud platforms, according to RightScale.[iv]To maintain flexibility and choose the right cloud for the right job, enterprises are increasingly avoiding single cloud provider lock-in. For example, they want to be able to store private data on-premises or in neutral colocation data centers while accessing compute services or applications from multiple public clouds. Hybrid/multicloud infrastructures are also driving the demand for greater private interconnection between enterprises and cloud and IT providers, with Interconnection Bandwidth projected to grow 98% annually between 2017 and 2021, according to the Global Interconnection Index, a market study published by Equinix.

As more enterprises explore SaaS, IaaS and PaaS solutions from multiple cloud providers, their cloud architectures are becoming infinitely more complex. And with greater complexity comes greater concerns about the security, integration and management of hybrid/multicloud architectures, particularly at the edge. This is why we’ve continued to innovate our Equinix Cloud Exchange Fabric™(ECX Fabric™) interconnection solution to meet our customers’ cloud complexity challenges. ECX Fabric is designed for scalability, agility and connectivity over a self-service portal or API where through a single physical port, enterprises and services providers can directly, securely and dynamically connect distributed infrastructures and digital ecosystems on Platform Equinix® via global, software-defined interconnection. ECX Fabric also enables remote access to different cloud platforms across multiple metros.

Looking forward to a more interconnected future

Rapid technology advances will continue to open the door to greater digital business speed, efficiency, security, intelligence and scale. But without proper IT infrastructures that are conceived and built to leverage interconnection to simplify complexity and integrate digital technologies from the start, organizations will not be able to realize their full benefits.

Are you prepared to leverage next-generation innovation and interconnection to make your IT infrastructure digital-ready to succeed as a digital business? To learn more about how your company can harness private interconnection to reach everywhere, interconnect everyone and integrate everything, check out our Platform Equinix Vision paper. And watch this space for future blogs that explore each of these predictions in detail to help you make your way out of the digital awkward years and into a successful 2019!